Medicaid To Shortchange Nursing Homes By $7B: Report

12/18/2012

Meg LaPorte

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​Medicaid reimbursement to nursing home providers will fall short of the actual cost of caring for residents by more than $7 billion nationally this year, according to a report released today by the American Health Care Association (AHCA). “On a per-resident, per-day basis, the average 2012 projected shortfall amount is $22.34,” the report says.

This is the largest shortfall reported since the inception of the study in 1999.

Speaking on a press call, Gov. Mark Parkinson, AHCA president and chief executive officer, noted that the sector has sustained a number of cuts, including sequestration, productivity adjustments, recent adjustment to the reimbursement of bad debt, and flattened or reduced Medicaid funding.

“The cumulative effect of all of these cuts has had a devastating effect on nursing homes across the country,” said Parkinson. “Unfortunately, one rationale provided for continuing this discussion about cutting these facilities relates to our margins, and specifically it relates to our Medicare margins.”

Parkinson pointed to perennial reports from the Medicare Payment Advisory Commission (MedPAC), in which it estimates that nursing homes have double-digit Medicare margins. But that tells only part of the story, Parkinson said. “Because most of the residents in nursing homes are long term care residents that are paid for through Medicaid, and our Medicaid margin is actually negative. The true story when you add up Medicare, the Medicaid margin, and private pay, is that the total margin for nursing homes across the country is very, very thin,” he said.

The report, conducted by Eljay for AHCA, “demonstrates the Medicaid program fails to fully pay providers who are caring for the nation’s most financially defenseless citizens,” an AHCA statement said.

Although there is much talk in Washington of Medicaid and how it’s ripe for cuts, Parkinson said, this report offers hard data that argues the opposite. “The reality is that this program already underpays nursing center providers. Cuts to Medicaid do not make sense for providers or for the millions of Americans who depend on the program”

Additional highlights from the report include:• The estimated average Medicaid shortfall for 2012 of $22.34 per Medicaid patient day is 14.3 percent higher than the preceding year’s projected shortfall of $19.55.• For a typical 100-bed facility in which 63 percent of residents rely on Medicaid for coverage, this shortfall would mean a loss of more than $500,000 annually.• Between 2010 and 2012, allowable costs increased an average of 4.2 percent, while Medicaid reimbursement rates only increased an average of 2.5 percent.

“As a researcher and author of this study for the past decade, I see adequacy of Medicaid payment for nursing facility services continuing to decline to their lowest point since the inception of the study,” said Joe Lubarksy, president of Eljay. “I don’t predict any significant shifts until there are significant improvements in state economies, and even then, the trend will continue to be toward a higher priority of funding for non-institutional services.”